Tax Loophole Romney Made Famous Now In Crosshairs Of Democrats, White House [View all]

[ProSense]

Dan Froomkin
Michael McAuliff

Tax Loophole Romney Made Famous Now In Crosshairs Of Democrats, White House

WASHINGTON -- A tax dodge that millionaire hedge fund managers use to slash their income taxes could soon become a major election issue, as congressional Democrats and the White House gear up for a fight to close the loophole.

What makes it a real hot-button issue is that presumptive Republican presidential nominee Mitt Romney is this particular loophole's poster child.

Under current tax law, certain kinds of financiers, including private equity investors and some managers of hedge funds, are allowed to treat bonuses like long-term investment income, called carried interest, taxable at the maximum 15 percent capital gains rate. Others have to pay up to 35 percent taxes on their labor income. The cost to the U.S. Treasury is more than $1 billion a year.

One of the main reasons Romney paid 13.9 percent in taxes on his $21.7 million income in 2010 is that a big chunk of that income came from performance bonuses still trickling in from private-equity investments he managed during his career at his former firm, Bain Capital.

Each of President Barack Obama's proposed budgets has called for eliminating this sweetheart deal, but no measure has managed to make it past Republican-led Senate filibusters. The legislation was reintroduced in January by House Ways and Means Committee ranking Democrat Sander Levin and his brother, Sen. Carl Levin, both of Michigan.

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http://www.huffingtonpost.com/2012/04/09/tax-loophole-mitt-romney-democrats_n_1412098.html?ref=elections-2012